Mayor Mitchell Presents Fiscal Year 2023 Budget
New Bedford, Massachusetts – Mayor Jon Mitchell presented his Fiscal Year 2023 City Budget to the New Bedford City Council on Wednesday, May 18, 2022.
Cautious, Conservative Spending Blueprint
Mayor Mitchell noted that the new City budget, the third developed since the start of the COVID-19 pandemic, reflects continuing impacts on City revenues and expenditures that require a “cautious, conservative approach to budgeting.”
The Mayor also expressed cautious optimism about the City’s financial outlook, noting:
- The City has been able to successfully manage the fiscal emergency of the past few years because of willingness to make tough decisions that are in the interest of the City’s long-term fiscal health. Working together with the City Council, the City has taken a surgical approach to expenditure reductions that has not jeopardized public safety or decimated essential services relied on by residents.
- Federal American Rescue Plan Act (ARPA) funding has provided the City with resources to support one-time costs and other key needs that otherwise could have drawn from the City budget or gone unfunded.
- The local economy continues to hold its own. The City’s unemployment rate has fallen significantly from its highest point during the early days of the crisis and continues to decline. Unemployment now stands at 5%, having further declined from 6.6% in January. Similarly, single-family home prices are trending upward, and commercial real estate investment opportunities are drawing attention from developers.
New Inflationary Concerns
New to this year’s budget is the necessity to cover significant cost increases associated with sizeable inflationary trends in energy and materials. Gasoline, diesel fuel, electricity, and natural gas prices have all skyrocketed in the past six months, as the global economy is facing inflationary pressures, supply chain disruptions and geopolitical instability that bear directly on New Bedford.
Mandates Consuming Three Quarters of Budget
Unrelenting growth in non-discretionary, mandated items such as pension obligations, other post-employment benefits, and health insurance costs continue to crowd out available revenues for essential municipal services. Mandated portions of the budget now account for more than 75% of all spending in the General Fund Budget, including:
- Health insurance, pension, and other insurance programs will increase in total more than $2.9 million, due to projected claims expenses and growing pension funding requirements.
- Funding for the School Department is projected to increase by $22.6 million, or 11.9%, to comply with the Commonwealth’s minimum Net School Spending requirements. This is one of the largest annual increases in memory.
- Funding for charter schools continues to consume an increasing share of City resources. The City’s contribution to Charter School Sending Tuition has risen from $22.8 million in FY22 to $26.9 million in FY23. Charter school expenses have significantly reduced the funding available to address needs in New Bedford Public Schools.
Call for Council to Act on Employee Health Care
In his remarks, Mayor Mitchell noted how employee health insurance has become a substantial driver of cost increases in the budget, and as such, is a major contributor to the property tax burden on our residents.
Since 2012, employee health insurance costs have risen from $35.2 million to $45.7 million, or nearly $1 million per year every year. The cost of employee health insurance will increase by 7% in FY23. Total spending on employee health care now accounts for more than 10% of the General Fund. And the return of inflation to the broader economy suggest that these trends will not let up anytime soon.
Mayor Mitchell used the occasion to again ask the City Council to implement a reform that virtually every other local government in southeastern Massachusetts has already implemented. Specifically, the Mayor called on the council to adopt Sections 21-23 of Chapter B of Massachusetts General Law. The adoption of these Sections equalizes the negotiating positions of the Administration and employee unions when negotiating health insurance benefits, by introducing a neutral arbiter.
A Commitment to Effective Partnership
Mayor Mitchell said the City will meet these challenges by relying on the cautious, deliberative approach and effective partnership with the City Council that long have served the City and residents well.
The FY2023 budget totals nearly $471.5 million, of which the General Fund is the largest component, at about $420.9 million.